Westly Group launches new cleantech fund

Wed May 11, 2011 3:01pm EDT

Related Topics

* Westly Group has raised $50 mln toward $175 mln fund

* Plans 80 pct cleantech, 20 pct Internet

* Says IPO market improving

By Peter Henderson and Poornima Gupta

MENLO PARK, Calif.,, May 11 (Reuters) - Clean technology venture capitalist The Westly Group has closed the first $50 million investment toward a new $175 million fund and sees the initial public offering market firming up.

The California group, which hit it big with Tesla Motors (TSLA.O) and Amyris Inc (AMRS.O) stakes, plans to continue investments in a range of technologies focused on clean energy and energy efficiency, with special focus on green building technology.

Westly, the former eBay (EBAY.O) executive and California politician who runs the group, also expects to put about 20 percent of the fund into Internet companies. Up to a fifth could be invested outside the United States, especially in China, he added.

The market for selling startups to big companies or in stock offerings is improving, as is interest by investors who want to get into startups on the ground floor.

"You are going to see a lot of cleantech IPOs here," Westly said in an interview. PricewaterhouseCoopers said that first quarter 2011 IPO proceeds hit $12.4 billion, the highest since 2008.

"I think there is a good chance we have an M&A exit this year, maybe two," Westly said. "We have at least one company in the portfolio that we believe will be over a hundred million (in revenue) next year. Depending on market conditions they should be able to go public, and that's Amonix."

Big energy companies and technology companies are both showing interest in the clean technology sector. French energy major Total SA (TOTF.PA) recently offered $1.37 billion for a majority stake in California solar panel maker SunPower Corp SPWRA.O.

"Big guys from two completely different worlds are both kind of converging on cleantech," Westly said.

His group aims to invest in second and third rounds of fundraising and offer help navigating the world of government, which can be a major buyer of clean technology, as well as backer with loans and grants.

The National Venture Capital Association characterized a 26 percent rise to $1.0 billion in clean technology VC investments in the first quarter versus the fourth as evidence of a "reasonable, rational" pace in the VC industry.

"Two things I know for sure -- (it's) clearly tougher to raise money now than it was, you know, three or five or ten or fifteen years ago, but I can just feel out there, it is getting easier every month because the economy is coming back, people are feeling more optimistic," Westly said. (for more environmental news see our Environment blog at blogs.reuters.com/environment) (Reporting by Peter Henderson; Editing by Tim Dobbyn)

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